2016, Volume 69 - Issue 4
RSS feed citation: At RePEc
Publication date: 13 October 2016
EMU AND THE ANCHORING OF INFLATION EXPECTATIONSRead the article
COMPARISON OF THE FUNDAMENTAL AND MONETARY MODELS OF THE DETERMINANTS OF THE ARGENTINE PESO/US DOLLAR EXCHANGE RATERead the article
THE IMPACT OF RECENT CRISIS ON THE REAL ESTATE MARKET IN THE UAE: EVIDENCE FROM ASYMMETRIC METHODSRead the article
Matti VIREN, University of Turku and Bank of Finland, Helsinki, Finland
This paper deals with the slowdown of economic growth in Europe. For that purpose, we focus on factors that affect the long-run growth path of different economies. Special emphasis is paid to institutional and structural factors that are often assumed to affect aggregate growth: functioning of labor markets, availability of labor and capital, and the size of government. For more explicit measures, we use the data on profit rates, average working hours, various dependency ratio indexes, tax rates, other measures of the size of government, and measures of price competitiveness. Empirical analysis makes use of cross-country panel data from EU15 countries for 1971-2014. Estimation results suggest that profitability and competitiveness do indeed constitute the main determinants of growth. However, also other variables like average working hours and the size of government appear to affect growth in an important manner. All in all, slowdown of growth in Europe does not appear to be beyond reasonable explanations. Thus, more ambitious growth rates may be achieved with well-designed policies.
Growth, Working Hours, Taxes, Competitiveness
Acemoglu, D. (2009), Introduction to Modern Economic Growth, Princeton University Press: New York.
Aghinon, P. and S. Durlauf (2007), From Growth Theory to Policy Design, A Memo prepared for the World Bank Commission on Growth.
Aquilina, M., R. Klump and C. Pietrobelli (2006), “Factor Substitution, Average Firm Size and Economic Growth”, Small Business Economics, 26(3), 203-214.
Barro, R. and X. Sala-i-Martin (1998), Economic Growth (Second edition), The MIT Press: Cambridge, MA.
Beck, T., A. Demirguc-Kunt, L. Laeven and R. Levine (2005), “Finance, Firma Size and Growth”, World Bank Policy Research Working Paper 3485.
Caselli, F. and J. Fryer (2007), “The Marginal Product of Capital”, Quarterly Journal of Economics, 122(2), 535-568.
Collingnon, S. (2011), A New Growth Strategy for Europe. Paper presented at the 39th Economics Conference in the Austrian Central Bank. Printed in the proceedings publication “The Future of European Economic Integration: Some Economic Perspectives”, OeNB: Vienna, 155-163.
EU Commission (2010), EUROPE 2020: A European Strategy for Smart, Sustainable and Inclusive Growth, EU Commission: Brussels.
Kilponen, J. and M. Virén (2010), “Why Do Growth Rates Differ? Evidence from Cross-Country Data on Private Sector Production”, Empirica, 37(3), 311-328.
Klump, R. and O. De la Grandville (2000), “Economic Growth and the Elasticity of Substitution: Two Theorems and Some Suggestions”, American Economic Review, 90(1), 282-291.
Koskela, E. and M. Virén (2000), “Is There a Laffer Curve between Output and Public Sector Employment?”, Empirical Economics, 25(4), 605-621.
Mayes, D. and M. Virén (2011), Asymmetry and Aggregation in the Euro Area, Palgarave-MacMillan: London.
OECD (2006), Reassessing the Role of Policies and Institutions for Labour Market Performance: A Quantitative Analysis. Chapter 7 , in: OECD Employment Outlook “Boosting Jobs and Incomes”, OECD: Paris.
OECD (2015), OECD Compendium of Productivity Indicators,
Snower, D., J. Burmeister and M. Seidel (2011), “Dealing with the Eurozone Debt Crisis: A Proposal for Reforms”, Kiel Policy Brief No. 33.
Tanzi, V. and L. Shuhknecht (2000), Public Spending in the 20th Century: A Global Perspective, Cambridge University Press: Cambridge, MA.
Virén, M. and M. Malkamäki (2002), The Nordic Countries, in: B. Steil, D. Victor, R. Nelson (Eds), “Technological Innovation & Economic Performance”, Princeton University Press: Princeton.